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Macroeconomics
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Review for Macroeconomics Unit Test
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40 cards
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Questions
40
Answers
1
What of the following are ALL included in GDP
Stocks, final goods and services, new factories
New construction, factory upgrades, exports
Land, new factories, new contruction
Stocks, foreign made goods, and used goods
2
Unemployment payments, welfare, and SNAP (food stamps) are examples of what policies?
Social Security benefits
Discretionary Government Spending
Monetary Policy
Automatic Stabilizers
3
What is the result of a decline in the world price of oil?
Decrease in LRAS, higher PL, decrease RGDP
Decrease in SRAS, higher PL, decrease RGDP
Increase in AD, higher PL, increase RDGP
Increase in SRAS, lower PL, increase RDGP
4
What do we call a combination of rising inflation and falling RGDP
Inflation
Unemployment
Stagflation
Negative Interest Rates
5
Natural disasters affect
commodities prices
all of these
SRAS
productivity
6
What are the components of the M1 Money Supply?
Everything in M2 plus bank CDs
Checkable deposits, 401(k)s, savings
Checkable deposits, money in circulation, bank CDs
Checkable deposits, money in circulation, savings accounts
7
The level of RGDP the economy would produce if all prices and wages, were fully flexible.
Full employment
Potential Output
LRAS
All of these are correct
8
The two biggest contributors to personal wealth are:
Commodities and wages
stocks and home (real estate) values
Wages and home (real estate) values
Stocks and commodities
9
During periods of high inflation, which of the following is true?
nobody wants to buy goods and services
the purchasing power of money is decreasing
low nominal interest rates are likely to result
people want to hold on to as much money as possible
10
The 3 tools of the Fed in a limited reserves banking system are:
OMOs, reserve, requirements, and interest rates
Interest rates, government spending, taxes
OMOs, taxes, reserve requirements
Government spending, OMOs, interest rates
11
What is the term/phrase given for 1 divided by the reserve ratio?
OMOs
Money multiplier
Spending multiplier
Tax multiplier
12
What is the result on the economy of the Fed lowering interest rates?
Decrease in AD, high PL, decrease in RGDP
Decrease in AD, lower PL, decrease in RGDP
Increase in AD, higher PL, increase RGDP
Increase in AD, lower PL, increase in RGDP
13
The max change in the money supply (limited Reserves): new deposits of $5,000 and a reserve ratio of 10%.
$50,000
$5,000
$4500
$45, 000
14
Which is the most powerful type of economic shock?
Tax shock
demand shock
interest rate shock
supply shock
15
The types of policies that resolve a recessionary gap
Expansionary
Contractionary
Contradictory
None of these
16
When a government uses taxes or government spending to reach macroeconomic goals.
Open Market Operations
Fiscal Policy
Automatic Stabilizer
Monetary Policy
17
What is the biggest limiting factor to the success of discretionary fiscal policy?
Foreign buyers
Fed changes to interest rates
People who collect disability
Lags in policy
18
What is the result in the economy when real estate values surge?
Increase in AD, higher PL, and increase in RGDP
Increase in SRAS, lower PL and increase in RGDP
Decrease in SRAS, higher PL and decrease in RGDP
Decrease in AD, lower PL, and decrease in RGDP
19
When I decide how much to sell my used car for, I am using money as...
store of value
barter token
unit of account
medium of excahnge
20
What type of policy is used to close an inflationary gap?
Lower taxes
Contractionary
Expansionary
Lower interest rates
21
Which group of people is considered part of the labor force?
discouraged workers
unemployed workers
retirees
military personnel
22
What is the formula that uses current yr qty and base yr prices to calculate national income?
Unemployment Rate
Real GDP
CPI
Nominal GDP
23
Which of the following is NOT included in the labor force?
structurally unemployed
frictionally unemployed
discouraged workers
part time emplyed
24
The unemployment rate is calculated by:
labor force divided by population
unemployed divided by labor force
unemployed divided by employed
unemployed divided by population
25
What is the major difference between LRAS and SRAS
When unemployment is below the natural rate
Stickey Wages and sticky prices
2 years
The period of time where interest rates are fixed
26
If the economy is to the left LRAS, the resulting recessionary gap will close when
aggregate price level falls and LRAS shifts to the left.
nominal wages fall and LRAS shifts to the left
nominal wages fall and SRAS shifts to the right
aggregate price level falls and AD shifts to the right
27
The money multiplier is equal to:
1 over the required reserves
1 over the MPS
1 over the reserve ratio
1 over the excess reserves
28
What is the function of money when you buy a new car?
Durability
Store of value
Medium of exchange
Unit of account
29
Increases in wealth...
Decrease AD
Decrease SRAS
Increase SRAS
Increase AD
30
What is the mkt where businesses & households exchange labor for wages in circular flow model.
Resource Market
Buyers Market
Foreign Exchange Market
Product Market
31
Which of the following is NOT included in GDP?
our exports
new construction
capital expenditures
financial assets
32
What are the phases of the business cycle that follow a trough?
Recovery into recession
None of these
Downturn then recovery
Recovery into expansion
33
In the short run, the equilibrium is determined by the intersection of:
SRAS and LRAS
potential output and LRAS
AD and SRAS
LRAS and AD
34
List two types of expansionary monetary policy (limite reserves).
decrease the money supply and buy bonds
Sell bonds and lower taxes
increase the money supply and buy bonds
lower taxes and increase government spending
35
Which of the following is NOT part of a recessionary gap due to a demand shock?
rising wages
falling GDP
rising inflation
rising unemployment
36
Labor force participation rate is equal to:
labor force divided by population
unemployed divided by population
unemployed divided by labor force
unemployed divided by employed
37
What do we call the calculation of labor force divided by population?
Unemployment Rate
Marginally Attached Worker Rate
Natural Rate of Unemployment
Labor Force Participation Rate
38
GDP measures:
social welfare
changes in the general level of prices
domestic production
material well being
39
What is the new CPI when inflation is 5% and the CPI last year was 200.
215
205
210
I hate math - why must we play these games?!
40
Name the favorite method of The Fed to shrink the money supply (limited reserves).
Buy Bonds
Lower the required reserve ratio
Sell Bonds
Lower the discount rate
